Medicare Home-Health Agencies Will Take a Financial Hit

The new health care law will likely mean that home-health agencies will take a bit of a financial hit. The decrease is small (about 2.5%) but may result in half of all Medicare home-health agencies operating in the red. As reported by Bloomberg:

Medicare payments to home health agencies such as Amedisys Inc. (AMED) and Gentiva Health Services Inc. (GTIV) would fall by more than $400 million, or 2.3 percent, in 2012 under a U.S. regulation issued today.

Though the reduction is less than what regulators proposed in July and will be phased in over two years, it will leave half of all Medicare home-health agencies operating in the red in 2012, said William Dombi, vice president for law at the National Association for Home Care and Hospice in Washington.

“The cuts are severe,” said Arthur Henderson, an analyst at Jefferies & Co. Inc. in Nashville, Tennessee. “There really is no relief here.”

The reductions fall heaviest on companies such as Amedisys, based in Baton Rouge, Louisiana, and Atlanta-based Gentiva, both of which provide more sessions of therapy that will be reimbursed at a lower rate, Henderson said.

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“These changes are intended to increase payment accuracy and reduce the growth in aggregate case-mix that is unrelated to changes in patients’ health status,” the Centers for Medicare and Medicare Services said in a statement.

Under the rule, payments for an episode of service, which covers 60 days of care over four visits or more, will decrease from $2,192 to $2,138, a decrease of 2.5 percent, Dombi said. The rule will make physical therapy less profitable than it had been before, he said

A Senate Finance Committee report released Oct. 3 alleged that several companies encouraged employees to make enough home- therapy visits to reach thresholds for bonuses from Medicare, no matter whether the sessions were medically necessary.